Obama's Campaign Turned Advocacy Group Raises Questions About Money

The Obama campaign, with its blockbuster fundraising lists, is being converted into a 501(c)(4) advocacy group. In a video this morning, first lady Michelle Obama announced that Obama For America, the juggernaut campaign committee, is becoming Organizing For Action. The move raises controversial issues about the political uses of a tax-exempt group.

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ROBERT SIEGEL, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

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And I'm Audie Cornish. President Obama likes to point out he'll never run for office again. And today, his campaign announced that it's essentially morphing into a new advocacy group, called Organizing for Action. It will lease the campaign's donor files, with more than 4 million names as well as its other data-mined information on voters. As NPR's Peter Overby reports, the new effort raises serious questions about the way tax-exempt groups now work in American politics.

PETER OVERBY, BYLINE: In a video released this morning, first lady Michelle Obama laid out the mission of the new organization.

(SOUNDBITE OF ORGANIZING FOR ACTION VIDEO)

MICHELLE OBAMA: If we want to finish what we started and truly make that change we believe in, we can't stop now. And that's why today, I'm proud that our friends and supporters are launching Organizing for Action, the next phase of our movement for change.

OVERBY: Leading Organizing for Action is the campaign's brain trust - campaign manager Jim Messina, chief fundraiser Julianna Smoot and consultant David Axelrod, among others. [POST-BROADCAST CORRECTION: Axelrod is not involved with Organizing for Action.] It's set up as a 501(c)(4) social-welfare organization. The tax law says 501(c)(4)s cannot have electoral politics as their primary purpose. But besides its grassroots work, it appears that the new OFA would be well-positioned to run so-called issue ads in the midterm elections. Those ads generally don't count as expressly political - as conservative 501(c)(4)s proved last year, to the distress of the Obama campaign.

A forthcoming analysis by the Wesleyan Media Project says that one of those social-welfare groups, Crossroads GPS, was the fourth-largest TV advertiser of the election season. Groups that are seeking tighter campaign-finance laws want the IRS to investigate Crossroads GPS. This morning on Fox News, strategist Karl Rove, a co-founder of Crossroads GPS, said Organizing for Action may face scrutiny but for its issue-advocacy work.

(SOUNDBITE OF FOX NEWS BROADCAST)

KARL ROVE: This is fraught will all kinds of ethical perils.

OVERBY: But Robert Kelner, one of Washington's top campaign-finance lawyers, says he's hard-pressed to see those perils.

ROBERT KELNER: None of these issues are issues that smart lawyers can't find a way to resolve.

OVERBY: OFA officials say they're giving up one of the advantages of 501(c)(4) status. They say they will voluntary disclose their donors, something few other 501(c)(4)s do. And unlike the Obama campaign, the new OFA can raise unlimited money, including cash from corporations, unions and the wealthy. It's that unregulated fundraising that makes 501(c)(4)s so desirable. Kelner says the creation of Organizing for Action may be another sign that the Republican and Democratic national committees are being eclipsed by social-welfare groups.

KELNER: The RNC and the DNC just can't keep up; just can't compete, in relative terms, with these extremely well-funded, unregulated, outside groups.

OVERBY: That would shift power away from the nationally organized party committees, toward small groups of consultants organized around individual politicians.

Peter Overby, NPR News, Washington.

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Correction March 18, 2013

The audio of this story incorrectly says that David Axelrod is among the leaders of the group Organizing For America. Axelrod is not involved with the organization.

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